The cost of living is not showing signs of moderating in the first quarter of this year and consumers need to be money savvy to stay afloat.
As the rising cost of living takes its toll on consumers, women are feeling the pinch of financial stress more than men.
This is according to a survey by DebtBusters. The debt councillor surveyed more than 14 000 people who had not signed up for its services to determine how money-related stress is negatively affecting other aspects of consumers’ lives, including their health, home and work.
According to the survey, 10% more women were stressed about their finances compared with men. More women than men also said this stress was affecting their home life, work and health.
Overall, 70% of the survey’s respondents said they were anxious or uneasy about the state of their finances. The majority of those (94%) said their anxiety was affecting their home lives, 77% said it was affecting their work and 76% believed it had a negative effect on their health.
The survey also found that more than 50% of the respondents run out of money before the end of the month, while 36% said they struggle to pay off their monthly debt. Moreover, 72% of the respondents said they spend more than 30% of their after-tax income on debt repayments.
Benay Sager, the chief operations officer at DebtBuster, noted that spending anything more than 30% of your income on debt is unsustainable. About 57% of the respondents said they were spending more than 40% of their income on debt repayments.
“And this would definitely be considered unsustainable for the long term. So essentially almost six out of 10 of our population is telling us that they are in an unsustainable financial position, when it comes to debt repayments,” Sager said.
The DebtBusters findings come a day before South Africa’s June consumer inflation print, which is expected to show an acceleration in prices compared with the month prior.
In May, inflation rose above the upper limit of the South African Reserve Bank’s target to 6.5% year-on-year, as elevated oil prices continued to choke consumers. The consensus is that headline consumer inflation will rise further by 7.3% year-on-year in June, driven primarily by an increase in petrol and food prices.
High inflation — as well as the considerable weakening of the rand amid tighter policy in the United States — will probably prompt the Reserve Bank to hike the repo rate again when its monetary policy committee meets this week.
Although the consensus expects another 50 basis point increase come Thursday, the Bureau for Economic Research is of the view that the committee will be more aggressive, hiking the rate by 75 basis points.
A higher repo rate, which affects the cost of borrowing, will make it even more difficult for financially strained consumers to pay their debt.